Executive Overview

Thomas & Betts Corporation is a leading designer and manufacturer of electrical components used in construction, industrial, utility and communications markets. We are a leading producer of highly engineered steel structures, used primarily for utility transmission. We are also a leading producer of commercial heating and ventilation units. We have operations in approximately 20 countries. Manufacturing, marketing and sales activities are concentrated primarily in North America and Europe.

Critical Accounting Policies

The preparation of financial statements contained in this report requires the use of estimates and assumptions to determine certain amounts reported as net sales, costs, expenses, assets or liabilities and certain amounts disclosed as contingent assets or liabilities. Actual results may differ from those estimates or assumptions. Our significant accounting policies are described in Note 2 of the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2008. We believe our critical accounting policies include the following:

• Revenue Recognition: We recognize revenue when products are shipped and the customer takes ownership and assumes risk of loss, collection of the relevant receivable is probable, persuasive evidence of an arrangement exists and the sales price is fixed or determinable. We recognize revenue for service agreements over the applicable service periods. Sales discounts, quantity and price rebates, and allowances are estimated based on contractual commitments and experience and recorded as a reduction of revenue in the period in which the sale is recognized. Quantity rebates are in the form of volume incentive discount plans, which include specific sales volume targets or year-over-year sales volume growth targets for specific customers. Certain distributors can take advantage of price rebates by subsequently reselling our products into targeted construction projects or markets. Following a distributor's sale of an eligible product, the distributor submits a claim for a price rebate. A number of distributors, primarily in our Electrical segment, have the right to return goods under certain circumstances and those returns, which are reasonably estimable, are accrued as a reduction of revenue at the time of shipment. We analyze historical returns and allowances, current economic trends and specific customer circumstances when evaluating the adequacy of accounts receivable related reserves and accruals. We provide allowances for doubtful accounts when credit losses are both probable and estimable.

• Inventory Valuation: Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out (FIFO) method. To ensure inventories are carried at the lower of cost or market, we periodically evaluate the carrying value of our inventories. We also periodically perform an evaluation of inventory for excess and obsolete items. Such evaluations are based on management's judgment and use of estimates. Such estimates incorporate inventory quantities on-hand, aging of the inventory, sales forecasts for particular product groupings, planned dispositions of product lines and overall industry trends.

• Goodwill and Other Intangible Assets: We apply the acquisition (purchase) method of accounting for all business combinations. Under this method, all assets and liabilities acquired in a business combination, including goodwill, indefinite-lived intangibles and other intangibles, are recorded at fair value. The initial recording of goodwill and other intangibles requires subjective judgments concerning estimates of the fair value of the acquired assets

and liabilities. Goodwill consists principally of the excess of cost over the fair value of net assets acquired in business combinations and is not amortized. For each amortizable intangible asset, we use a method of amortization that reflects the pattern in which the economic benefits of the intangible asset are consumed. If that pattern cannot be reliably determined, the straight-line amortization method is used. We perform an annual impairment test of goodwill and indefinite-lived intangible assets. We perform our annual impairment assessment as of the beginning of the fourth quarter of each year, unless circumstances dictate more frequent interim assessments. In evaluating when an interim assessment of goodwill is necessary, we consider, among other things, the trading level of our common stock, changes in expected future cash flows and mergers and acquisitions involving companies in our industry. In evaluating when an interim assessment of indefinite-lived intangible assets is necessary, we review for significant events or significant changes in circumstances. Our evaluation process did not result in an interim assessment of goodwill or long-lived intangible assets for recoverability during 2009.

In conjunction with each test of goodwill we determine the fair value of each reporting unit and compare the fair value to the reporting unit's carrying amount. A reporting unit is defined as an operating segment or one level below an operating segment. We determine the fair value of our reporting units using a combination of three valuation methods: market multiple approach; discounted cash flow approach; and comparable transactions approach. The market multiple approach provides indications of value based on market multiples for public companies involved in similar lines of business. The discounted cash flow approach calculates the present value of projected future cash flows using appropriate discount rates. The comparable transactions approach provides indications of value based on an examination of recent transactions in which companies in similar lines of business were acquired. The fair values derived from these three valuation methods are then weighted to arrive at a single value for each reporting unit. Relative weights assigned to the three methods are based upon the availability, relevance and reliability of the underlying data. We then reconcile the total values for all reporting units to our market capitalization and evaluate the reasonableness of the implied control premium.

To the extent a reporting unit's carrying amount exceeds its fair value, an indication exists that the reporting unit's goodwill may be impaired, and we must perform a second more detailed impairment assessment. The second impairment assessment involves allocating the reporting unit's fair value to all of its recognized and unrecognized assets and liabilities in order to determine the implied fair value of the reporting unit's goodwill as of the assessment date. The implied fair value of the reporting unit's goodwill is then compared to the carrying amount of goodwill to quantify an impairment charge as of the assessment date.

Methods used to determine fair values for indefinite-lived intangible assets involve customary valuation techniques that are applicable to the particular class of intangible asset and apply inputs and assumptions that we believe a market participant would use.

• Long-Lived Assets: We review long-lived assets to be held-and-used for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Indications of impairment require significant judgment by management. For purposes of recognizing and measuring impairment of long-lived assets, we evaluate assets at the lowest level of identifiable cash flows for associated product groups. If the sum of the undiscounted expected future cash flows over the remaining useful life of the primary asset in the associated product groups is less than the carrying amount of the assets, the assets are considered to be impaired. Impairment losses are measured as the amount by

which the carrying amount of the assets exceeds the fair value of the assets. When fair values are not available, we estimate fair values using the expected future cash flows discounted at a rate commensurate with the risks associated with the recovery of the assets. Assets to be disposed of are reported at the lower of carrying amount or fair value less costs to dispose.

• Pension and Other Postretirement Benefit Plan Actuarial Assumptions: The Corporation records the overfunded or underfunded status of benefit plans on its balance sheet. For purposes of calculating pension and postretirement medical benefit obligations and related costs, we use certain actuarial assumptions. Two critical assumptions, the discount rate and the expected return on plan assets, are important elements of expense and/or liability measurement. We evaluate these assumptions annually. Other assumptions include employee demographic factors (retirement patterns, mortality and turnover), rate of compensation increase and the healthcare cost trend rate. See additional information contained in Management's Discussion and Analysis of Financial Condition and Results of Operations - Qualified Pension Plans.

• Income Taxes: We use the asset and liability method of accounting for income taxes. This method recognizes the expected future tax consequences of temporary differences between book and tax bases of assets and liabilities and requires an evaluation of asset realizability based on a more-likely-than-not criteria. We have valuation allowances for deferred tax assets primarily associated with foreign net operating loss carryforwards and foreign income tax credit carryforwards. Realization of the deferred tax assets is dependent upon our ability to generate sufficient future taxable income. We believe that it is more-likely-than-not that future taxable income, based on enacted tax laws in effect as of September 30, 2009, will be sufficient to realize the recorded deferred tax assets net of existing valuation allowances.

• Environmental Costs: Environmental expenditures that relate to current operations are expensed or capitalized, as appropriate. Remediation costs that relate to an existing condition caused by past operations are accrued when it is probable that those costs will be incurred and can be reasonably estimated based on evaluations of currently available facts related to each site. The operation of manufacturing plants involves a high level of susceptibility in these areas, and there is no assurance that we will not incur material environmental or occupational health and safety liabilities in the future. Moreover, expectations of remediation expenses could be affected by, and potentially significant expenditures could be required to comply with, environmental regulations and health and safety laws that may be adopted or imposed in the future. Future remediation technology advances could adversely impact expectations of remediation expenses.

2009 Outlook

We experienced continued pressure in all of our key markets in the first nine months of 2009. The lack of any meaningful improvement in credit availability crippled capital investment in the global industrial base and severely curtailed spending on construction projects. We have not yet seen any notable impact from government-initiated stimulus spending. We did not experience the traditional seasonal summer increase in non-residential construction-related demand usually seen in our Electrical segment during the first nine months of 2009. Constraints on credit availability and unfavorable vacancy rates continue to have a serious impact on commercial construction spending. Residential markets continue to suffer from overcapacity as well as credit constraints. Given these factors, we believe that our markets will not show meaningful improvement in the fourth quarter of the year.

We expect full-year 2009 consolidated net sales to be down 23% to 25% compared to 2008 results. In our Electrical segment, we expect year-over-year net sales to be down 25% to 28%, and in our HVAC segment, we expect net sales to be down 22% to 25%. The sales declines in our Electrical and HVAC segments should be somewhat mitigated by flat to slightly positive net sales growth in our Steel Structures segment. We expect that the year-over-year sales decline in the fourth quarter will not be as severe due to a more favorable comparison with last year's fourth quarter which reflected a significant strengthening of the U.S. dollar and weaker market conditions in 2008. We expect Electrical segment earnings in the high teens as a percent of net sales for the fourth quarter of 2009 reflecting the continued favorable impact of lower overall manufacturing costs and maintaining our pricing discipline. Expected Electrical segment earnings in the fourth quarter also reflect approximately $4 million in expenses related to an in-process consolidation of a manufacturing facility. We also expect Steel Structures segment earnings of 17% to 19% of net sales and HVAC segment earnings of 14% to 17% of net sales for the fourth quarter of 2009.

We have narrowed the range of our expectation for diluted per share earnings for the full-year 2009 to $2.10 to $2.25. This range reflects an expected fourth quarter charge of $0.05 per diluted share for an in-process facility consolidation. Fourth quarter guidance assumptions include approximately 52.5 million average shares outstanding and an effective tax rate of approximately 29.5%. On a combined basis, corporate expense, depreciation, amortization, share-based compensation, other expense and interest expense, net will roughly equal that reported in the third quarter.

With our expectation of continued weak market demand in the fourth quarter of 2009, we have continued to focus on adjusting production to match demand, reducing headcount and curtailing wage costs, tightly managing discretionary spending and prudently managing cash. The key risks to achieving results within our full year 2009 earnings per share range include further disruption in credit markets and the negative impact on credit availability in key end markets, excessive fluctuation in foreign currencies versus the U.S. dollar, volatility in commodity costs and availability and additional or heightened slowdowns in key market segments and geographic regions.

                        Summary of Consolidated Results


                                                         Quarter Ended September 30,
                                                   2009                              2008
                                                           % of Net                          % of Net
                                        In Thousands        Sales         In Thousands        Sales

Net sales                              $      485,075          100.0     $      665,679          100.0
Cost of sales                                 337,485           69.6            457,406           68.7

Gross profit                                  147,590           30.4            208,273           31.3
Selling, general and administrative            91,957           18.9            106,918           16.1

Earnings from operations                       55,633           11.5            101,355           15.2
Interest expense, net                          (8,478 )         (1.8 )           (9,355 )         (1.4 )
Other (expense) income, net                    (2,101 )          (.4 )             (469 )            -

Earnings from continuing operations
before income taxes                            45,054            9.3             91,531           13.8
Income tax provision                           12,943            2.7             28,375            4.3

Net earnings from continuing
operations                                     32,111            6.6             63,156            9.5
Earnings (loss) from discontinued
operations, net                                     -              -               (997 )         (0.2 )

Net earnings                           $       32,111            6.6     $       62,159            9.3

Basic earnings (loss) per share:
Continuing operations                  $         0.62                    $         1.11
Discontinued operations                             -                             (0.01 )

Net earnings                           $         0.62                    $         1.10

Diluted earnings (loss) per share:
Continuing operations                  $         0.61                    $         1.11
Discontinued operations                             -                             (0.02 )

Net earnings                           $         0.61                    $         1.09

                                                       Nine Months Ended September 30,
                                                   2009                              2008
                                                           % of Net                          % of Net
                                        In Thousands        Sales         In Thousands        Sales

Net sales                              $    1,405,906          100.0     $    1,902,500          100.0
Cost of sales                                 988,965           70.3          1,307,991           68.8

Gross profit                                  416,941           29.7            594,509           31.2
Selling, general and administrative           277,605           19.8            323,692           17.0

Earnings from operations                      139,336            9.9            270,817           14.2
Interest expense, net                         (26,317 )         (1.8 )          (33,455 )         (1.7 )
Other (expense) income, net                     1,649            0.1             (2,416 )         (0.1 )
Gain on sale of equity interest                     -              -            169,684            8.9

Earnings from continuing operations
before income taxes                           114,668            8.2            404,630           21.3
Income tax provision                           33,827            2.4            155,273            8.2

Net earnings from continuing
operations                                     80,841            5.8            249,357           13.1
Earnings from discontinued
operations, net                                     -              -             (1,106 )         (0.1 )

Net earnings                           $       80,841            5.8     $      248,251           13.0

Basic earnings (loss) per share:
Continuing operations                  $         1.54                    $         4.35
Discontinued operations                             -                             (0.02 )

Net earnings                           $         1.54                    $         4.33

Diluted earnings (loss) per share:
Continuing operations                  $         1.53                    $         4.31
Discontinued operations                             -                             (0.02 )

Net earnings                           $         1.53                    $         4.29

2009 Compared with 2008

Overview

Net sales in the third quarter and the first nine months of 2009 decreased significantly from the respective prior-year periods primarily reflecting lower sales volumes on weaker global demand in our Electrical and HVAC segments. A stronger U.S. dollar during 2009 also negatively impacted net sales in the third quarter and first nine months of 2009. Gross profit in the third quarter and first nine months of 2009 decreased as a percent of net sales reflecting the impact of significantly lower production volumes.

Earnings from operations in dollars and as a percent of sales decreased from the respective prior-year periods primarily as a result of lower sales and production volumes. Prior actions taken to lower overall manufacturing costs - including headcount and expense cuts - and the impact of lower current year commodity costs coupled with our continued discipline in managing mix and price helped mitigate the negative impact of lower sales volumes on 2009 earnings. Earnings from operations in the third quarter and in the first nine months of 2009 reflect a $4 million pre-tax charge related to an estimate revision for an environmental remediation site. Earnings from operations in the first nine months of 2008 reflect a favorable $12 million legal settlement included in selling, general and administrative expense.

We sold our minority interest in Leviton Manufacturing Company ("Leviton") in the second quarter of 2008 for net proceeds of $280 million and recognized a pre-tax gain of $169.7 million ($1.74 per diluted share after tax).

Net earnings in the third quarter of 2009 were $32.1 million, or $0.61 per diluted share compared to net earnings of $62.2 million, or $1.09 per diluted share in the prior-year period. Net earnings in the first nine months of 2009 were $80.8 million, or $1.53 per diluted share compared to net earnings of $248.3 million, or $4.29 per diluted share in the prior-year period. The third quarter and first nine months of 2009 included a net after-tax charge of $0.05 per diluted share related to an estimate revision for an environmental remediation site. The first nine months of 2008 included unusual items which, on a net basis, contributed $1.63 per diluted share.

Net Sales and Gross Profit

Net sales in the third quarter of 2009 were $485.1 million, down $180.6 million, or 27.1%, from the prior-year period. For the first nine months of 2009, net sales were $1.4 billion, down $496.6 million, or 26.1%, from the prior-year period. The year-over-year sales decrease in both periods primarily reflects lower sales volumes on weaker global demand in our Electrical and HVAC segments. The stronger U.S. dollar negatively impacted sales by approximately $19 million in the third quarter of 2009 and approximately $92 million in the first nine months of 2009 when compared to the prior-year periods.

Gross profit in the third quarter of 2009 was $147.6 million, or 30.4% of net sales, compared to $208.3 million, or 31.3% of net sales, in the third quarter of 2008. Gross profit in the first nine months of 2009 was $416.9 million, or 29.7% of net sales, compared to $594.5 million, or 31.2% of net sales, in the prior-year period. The year-over-year decrease as a percent of sales in both periods reflects the impact of lower production volumes.

Selling, General and Administrative

Selling, general and administrative ("SG&A") expense in the third quarter of 2009 was $92.0 million, or 18.9% of net sales, compared to $106.9 million, or 16.1% of net sales, in the prior-year period. SG&A expense in the first nine months of 2009 was $277.6 million, or 19.8% of net sales, compared to $323.7 million, or 17.0% of net sales, in the prior-year period. The first nine months of 2009 reflects a third quarter $4 million environmental remediation charge. The first nine months of 2008 reflects a favorable second quarter $12 million legal settlement.

Interest Expense, Net

Interest expense, net was $8.5 million for the third quarter of 2009, down $0.9 million from the prior-year period. Interest expense, net was $26.3 million for the first nine months of 2009, down $7.1 million from the prior-year period. Both current year periods reflect lower average debt outstanding. Interest income included in interest expense, net was $0.2 million for the third quarter of 2009 and $1.5 million for the third quarter of 2008. Interest income included in interest expense, net was $0.4 million for the first nine months of 2009 and $3.8 million for the first nine months of 2008.

Income Taxes

The effective tax rate in the third quarter of 2009 was 28.7% compared to 31.0% in the third quarter of 2008. The effective tax rate in the third quarter of 2009 reflects a refining of our estimates of the global distribution of 2009 estimated earnings. The effective tax rate for the first nine months of 2009 was 29.5% compared to 38.4% in the first nine months of 2008. The higher

prior year effective rate for the first nine months of 2008 reflects the gain on sale of our minority interest in Leviton and a $14 million non-cash tax charge, which both occurred in the second quarter. The effective rate for both years reflects benefits from our Puerto Rican manufacturing operations.

Net Earnings

Net earnings in the third quarter of 2009 were $32.1 million, or $0.61 per diluted share, compared to $62.2 million, or $1.09 per diluted share, in the prior-year period. Net earnings in the first nine months of 2009 were $80.8 million, or $1.53 per diluted share, compared to $248.3 million, or $4.29 per diluted share, in the prior-year period. The third quarter and first nine months of 2009 included a net after-tax charge of $0.05 per diluted share in the third quarter related to an estimate revision for an environmental remediation site. The first nine months of 2008 included a net after-tax gain of $1.63 per diluted share in the second quarter related to the gain on the sale of our minority interest in Leviton of $1.74 per diluted share, a favorable legal settlement of $0.13 per diluted share and a non-cash tax charge related to an adjustment of prior period deferred income taxes of $0.24 per diluted share.

                           Summary of Segment Results

Net Sales


                                 Quarter Ended September 30,                                Nine Months Ended September 30,
                             2009                          2008                           2009                           2008
                       In          % of Net          In          % of Net          In           % of Net          In           % of Net
                   Thousands        Sales        Thousands        Sales         Thousands        Sales         Thousands        Sales

Electrical         $  410,872           84.7     $  578,817           87.0     $ 1,163,062           82.7     $ 1,638,382           86.1
Steel Structures       50,922           10.5         55,700            8.3         167,817           12.0         164,091            8.6
HVAC                   23,281            4.8         31,162            4.7          75,027            5.3         100,027            5.3

                   $  485,075          100.0     $  665,679          100.0     $ 1,405,906          100.0     $ 1,902,500          100.0

Segment Earnings


                                                Quarter Ended September 30,                                   Nine Months Ended September 30,
                                            2009                            2008                            2009                            2008
                                     In           % of Net           In           % of Net           In           % of Net           In           % of Net
                                 Thousands         Sales         Thousands         Sales         Thousands         Sales         Thousands         Sales

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